News on Canadian Mortgage Rates – The Unrecognized One-Year Mortgage Loan09/04/2013 11:13
Home buyers, both first time and second time buyers, are no longer lining up and applying for short term mortgages, given the attractive mortgage rates on long term loans. This is especially true for mortgage loans that come with terms of 5 and 10 years.
However, if you are a financially stable and secure borrower, and you are aware of the fact that the direction of mortgage rates is random, you should not just write off 1-year mortgage loans that easily. Why? Because a one-year mortgage loan may just prove to be the wisest decision for you to make. How? Here’s how.
For example, you are thinking about getting a loan that comes with a 5-year term. If you believe (and mortgage loan lenders also believe) that you are not a high risk borrower, the options that you have include the following:
· 5-Year Variable (or Adjustable) Rate Mortgage
· 5-Year Fixed Rate Mortgage
· 1-Year Fixed Mortgage
The overall borrowing timeframe for each of these options is 5 years. However, the one-year mortgage term allows you to:
· Get the maximum savings on upfront interest
· Keep enjoying the low mortgage rates in the event that the costs of borrowing remain low
· Switch to a mortgage loan that comes with a longer term after the one year period ends in the event that the rates begin to rise
As you can see, applying and getting qualified for a one-year mortgage loan will not only help you become a first time home owner or an owner of a second home, but also allow you to save money along the way. As long as you are financially stable, secure, and capable, you should highly consider taking out this type of mortgage loan rather than just settling for one that comes with a longer term.